As a payback initiative to mudraa, i would like to bring across a simple trading strategy in which you can trade any liquid stock or index of your choice when you do not study eod charts or if you study eod charts and your study is wrong with respect to the direction of the next day trend of the stock/index.i.e. today through your eod study,by applying whatever indicators,moving averages,etc….,you feel that nifty might go down tomorrow. But in this strategy most of the times you would not get any signal to sell tomorrow. What I do is study EOD charts but do not take a firm view for the next day.I just try to be with the overall intra day trend on any given day.
The whole purpose is to make each and every trader self-reliant in taking trading decisions and not to rely and “BEG” on the so called call providers who only turn up when their call is in profit and don’t update when their call is in loss. It is a universal rule that if we rely on someone for something you are bound to be taken advantage of……
Moving forward, also I would suggest you to trade Nifty, Bank Nifty and LIX index stocks through this strategy. The best would be of course nifty and then bank nifty.
The list of LIX stocks can be viewed at:-http://www.nseindia.com/products/content/equities/indices/LIX_15.htm
I generally refer many trading websites/blogs, etc…so it is possible that you might found it somewhere else too and hence I am not at all taking any credit for this.
Here is the setup:-
1) Stocks/Index trading in a Positive or Negative crossover of EMA 50 and EMA 100 on intraday 5 min chart.(most of the times each and every scrip would be either trading negative or positive)
2) 14 period RSI.
3) We will buy the stock/index if EMA 50 > EMA 100 and RSI after dipping below 50 levels again surges above 50 levels and price would have at least touched 50 or 100 EMA.Buy would be above the high of the candle whose RSI is more than 50.You can have a risk reward of 1:2 in any trade. You can decide the SL as previous swing low and hence according the target.But generally if the Stocks/Index is trending well it would go to touch previous high, so would recommend you to trade in minimum two lots.Book profit in one when we even break even level.
4) Reverse for short.
5) Trade would be initiated after 10 am and no new trade after 3.Of course you can wait to book profits till 3.25 in you already opened positions .
6) Better to avoid on big announcement days like RBI policy.
Charts are attached for your reference.
You can bend any rule, sparing the basic setup and trade according to your trading style. I would suggest options trading for newbies and those who want to generate more return on capital invested. But again trading in options involves risk too .Never ever average a losing position, just come out when our SL gets triggered.
The biggest advantage of the strategy is it is purely intraday (of course you can carry over if you have total conviction in the trend of the Stocks/Index) and hence no sleepless nights.
Have a good time with your family member’s after market hours……
I would suggest you all to trade intraday as everyday, we get ample trading opportunities to trade.
Again because of my schedule, sometimes I might not get back to queries on urgent basis, so all who are trading are suggested to keep tight SL’s. Will do my every bit to answer all queries.
Last but not the least BE WISE, STAY WISE ….After all its all your hard earned money so better only you be responsible for any profit/loss from it rather than depending on any one else…..
Healthy discussion welcomed and seniors expected to innovate to make trading a pleasurable experience for all of us.
I am not at all an expert in posting things (my language, charts posting, etc…), so please bare with me…..
Regards and Happy Trading…..
One more observation which I forgot to mention.
Price touching 50 EMA before our action gives a good oppurtunity
But price touching 100 EMA before our action gives the BEST oppurtunity..
Bank Nifty Spot chart of yesterday(i.e.20 th December).Continuing the up trend today.This is what I meant by swing trading position.As our postion was almost 100 points in our favor, if we would booked part profits and carried the rest today ,uptill now,we would have got more than 125 points today too..
One more Observation....
The first pullback immedieately after an crossover is highly profitable to trade and gives good results.....